The market focus has been on credit and fixed income (Treasuries), but credit should not be forgotten. The Fed rate increases will impact issuance, spreads, and trading is this large market sector.
Corporate bond issuance has slowed especially for high yield. The market is less friendly on an absolute and spread basis.
Investors are rebalancing their corporate bond exposures as measured by trading volume. Large increases in trading occurred around the March pandemic surge and during the first quarter of 2021 when expectations for improved growth hit the market.
Spreads are widening and cost of capital is increasing with more rate increases coming. Corporate treasurers are cautious about raising new funds until the inflation and rate environment stabilizes. Higher bond volatility as proxy for uncertainty leads to financing delays.
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